A territorial dispute between China and India, which resulted in a ten-week military standoff, has revived a decades-old Sino-Indian rivalry that will become more visible as both nations emerge as the world’s largest and third-largest economies respectively by 2030, writes Manjeet S Pardesi.

OPINION: On 16 June 2017, Chinese troops began extending a road into the Doklam/Donglang territory, a region where Bhutan and China have overlapping terroritorial claims. India, which has a defence and foreign policy treaty with Bhutan, responded with troops at Bhutan's request, to prevent further construction. An ensuing tense standoff between China and India lasted for 70 days, causing fears of military escalation, before coming to an end on 28 August.

Given other hotspots in Asia, from the Korean peninsula to the South China Sea, the diplomatic resolution is a welcome development. While China and India (and Bhutan) are in the process of establishing status quo ante in terms of territorial control, the crisis itself marks the revival of the Sino-Indian rivalry after a period of relative dormance.

Ever since then-Indian Prime Minister Rajiv Gandhi, during his landmark 1988 trip to China, came to an agreement with then-Chinese leader Deng Xiaoping to leave contentious issues on the backburner, both nations have tried to emphasise cooperation while downplaying friction. China’s economic reforms (that began in 1978), the end of the Cold War (1989-91), and the launch of India’s economic reforms (in 1991) gave a big boost to the Sino-Indian relationship. Today, China is India’s largest trading partner, while India is among China’s top dozen trading partners. Over the past 25 years, China and India have also signed several agreements to better manage their border dispute: The 1993 and 1996 confidence-building measures, the 2005 agreement on the political parameters for settling their border dispute, and the 2012 working mechanism for consultation/coordination on border issues. At the same time, China and India are members of the BRICS (Brazil, Russia, India, China, and South Africa) grouping of major emerging economies and the Asian Infrastructure Investment Bank (AIIB), where India is the second-biggest stakeholder after China.

In spite of these positive developments, the Sino-Indian rivalry has been becoming more conspicuous in recent years, even as China is clearly the more powerful actor. For example, the Sino-Indian trade relationship is imbalanced as Chinese exports, valued at US$61.3 billion, accounted for the bulk of the Sino-Indian total trade of US$71.5 billion in 2016-17. Similarly, China’s GDP of US$11.2 trillion in 2016 was almost five times higher than India’s US$2.3 trillion, while China’s defence budget of US$215.2 billion was almost four times of India’s US$55.92 billion budget.

However, power balances are not about the static distribution of material capabilities; instead, they are about changing power dynamics. India is expected to grow at a slightly faster pace compared with China in the coming decade. While India’s faster economic growth needs to be understood as the more rapid expansion of a much smaller economy, the faster growth – even by a small margin over several years – will be of geopolitical significance. Since China is expected to grow faster than the United States, Japan, and all other major economies in the coming years, India will be the only major power in Asia that will narrow the relative power gap with China. At the same time, India in 2013 began the largest peacetime expansion of its armed forces since the 1962 Sino-Indian War, and is upgrading its conventional military strategy vis-à-vis China from defence to deterrence. Notably, New Delhi is creating a mountain strike corps in the Himalayas.

Finally, India has also added geopolitical weight to its relations with the US and Japan. The US has designated India as a “major defence partner”, a status created especially for India, while Japan and India are launching the Asia-Africa Growth Corridor to balance China’s Belt and Road Initiative (BRI). India was the only major power to boycott China’s Belt and Road summit earlier this year. New Delhi has already expressed its unhappiness to Beijing about the China-Pakistan Economic Corridor, the flagship BRI project that passes through Pakistan-administered Kashmir, an area also claimed by India.

While the recent Doklam/Donglang standoff might have emerged as an unintended crisis, the changing geopolitical contours in the wider Asian region mean that the Sino-Indian rivalry will become more visible as China and India emerge as the world’s largest and third-largest economies respectively by 2030.

Manjeet S Pardesi is Senior Lecturer in International Relations, and Asia Research Fellow at the Centre for Strategic Studies, at Victoria University of Wellington. Views expressed in this article are personal to the author.